What is STO?

STO — Security Token Offering.

In contrast to utility tokens, security tokens are tied to real securities that represent tokenized assets.

Security tokens are real capital of the company acting as a digital share. They are not necessary tied to the company’s share and can be used for separating the owner rights to any assets, ranging from property to art objects. Thus, security tokens are investments. Additional regulatory and reporting requirements are imposed on the companies issuing security tokens.

This is the key difference from utility tokens. In the case of ICO investors have not any compensation upon a project failure or if founders are a scammers escaping with investor funds.